M1 - Proprietary Funds Financial Statements Flashcards
Interest expense associated with the proprietary and fiduciary funds are accounted for on the accrual basis. (true or false)
True (SE PAPI)
A statement of cash flows must be presented for all proprietary funds as part of a set of financial statements. (true or false)
True
Depreciation expense is not recorded in the governmental funds, but is recorded in the proprietary funds. (true or false)
True
Shared revenues are revenues levied by one government but shared on a predetermined basis with another government. Shared revenues received by a proprietary fund should be recorded as what?
Non-operating revenues
IF received for either operations or capital expenditures at the discretion of the recipient governmental unit.
Through an internal service fund, New County operates a centralized data processing center to provide services to New’s other governmental units. In Year 1, this internal service fund billed New’s parks and recreation fund $150,000 for data processing services. What account should New’s internal service fund credit to record this $150,000 billing to the parks and recreation fund?
Operating revenues control
DR: Due from other funds
CR: Operating revenues control
Due from other funds appears on the income statement or balance sheet?
Balance sheet. They are not a component of changes in net position
The town of Hill operates municipal electric and water utilities. In which of the following funds should the operations of the utilities be accounted for?
Enterprise fund
The enterprise fund accounts for government’s for-profit type of operations, which provides goods or services to the general public. Municipal utilities fit this criteria and are therefore recorded in the enterprise fund.
Internal Service Funds are what?
Proprietary funds, which service internal users, that is one department servicing another within the governmental entity.
The internal service fund accounts for the providing of goods or services by one department to other departments on a cost-reimbursement basis.
EX: Municipal motor pools are a good example of internal service funds.
The billings for transportation services provided to other governmental units are recorded by the internal service fund as:
Operating revenues
These are considered quasi-external transactions and are treated as revenues by the internal service fund.
Proprietary and Fiduciary funds record and depreciate their own fixed assets in a manner consistent with the economic resources management focus and accrual accounting. (true or false)
True
Enterprise fund
An enterprise fund is used to account for operations financed and operated in a manner similar to a private business enterprise. This fund is also used for governmental facilities and services intended to be primarily (>50%) self-supported by user charges.
Activities are required to be reported as enterprise funds if any one of the following criteria are met:
- The activity is financed with debt that is secured solely by a pledge of the net revenue from fees and charges.
- Laws and regulations require that the cost of providing services be recovered through fees
- The pricing policies of the activity establish fees and charges designed to recover its costs.
A non-reciprocal transfer would be reported in the internal service fund as a credit to what?
Transfers
Ex: Gem City’s internal service fund received $50,000 cash from the general fund to capitalize this fund. This $50,000 should be reported in Gem’s internal service fund as a credit to transfers.
An enterprise fund may be used to account for the provision of goods and services that are financed mainly by user charges. Both a state-operated lottery and a state-operated hospital are financed mainly by user charges. (true or false)
True
Accounting and reporting for proprietary funds is similar to accounting and reporting for a business enterprise. Thus, the full accrual basis is used and measurement focus is on net income and capital maintenance. (true or false)
True
